LexM/S CHAHAL ENGINEERING CONSTRUCTION CO. versus IRRIGATION DEPARTMENT, PUNJAB, SIRSA
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MIS CHAHAL ENGINEERING CONSTRUCTION CO. A v. IRRIGATION DEPARTMENT, PUNJAB, S!RSA JULY 30, 1993 [KULDJP SINGH AND P.B. SA WANT, JJ.] Arbitration Act, 1940: Sections 30( a), 30( c }-Award-Grounds for setting aside-Ar- bitratm-Misconduct-Held, misconduct includes an e1rnr on the face of the record-Award suffers from several patent emn:r-Objection allowed. award set aside-Matter rcfC1red to a new arbitration. The appellant-company entered into a contract with the respondent- Department for construction of an aqueduct on turn-key basis for a lump- B c sum total cost of Rs. 6.10 crores. According to the agreement, the drawing o· and dc;ign works were to be supplied by the appellant for approval of the respondent Department and in case of any deviation in the design increase in cost would not be charged to the respondent. The detailed designs and specifications furnished by the appellant did not show any sealing arrange- ments 'lith provision for proper bearing pads and hence it was decided .fo adopt pre-stressed complete super-structure. The involved increase in the quantities of matters. The appellant claimed extra amount on account ol"the increase in the quantities and costs. This give rise to a dispute between the parties and the matter \\'as referred to an arbitrator. E The arbitrator held that the contract on lump-sum basis had come F to an end and was replaced by a contract on the item rate basis. He allowed reimbursement of extra costs due to incr~ase in quantities in intern1ediate well-foundations as well as reimbursements of costs for providing well- foundations under the abutments and a\varded cotnpensation f'or the actual work done at the rates provided in the common schedule of rates, Volume II, PWD manual. Over and above these rates he also allowed a G premium of 575%. The arbitrator held that the appellant was entitled to the extra cost incurred by in on account of increase in quantities not~ withstanding that the contract was on a lump-sum basis because the modification made in the design were not the type of aqueduct which formed part of the agreetnent, the modifications in the design were not the H 449 450 SUPREME COURT REPORTS 11993] SUPP. l S.C.R. A 1nodifications referred to in the agreement, and the increase in quantities B · on account of the changes was verified by the respondent. Since the work was in progress, the award did not mention either the specific quantities or the total amount to be payable and the actual amount was left to be worked out in the light of the observations made in the award. The Arbitrator also pronounced and interirn a\\·ard in favour of the appellant amounting to Rs. 55 lakhs pending the working out of the final amount. The award was sought to be made a rule of the court by the appellant by, filing a suit in the civil court. The respondent preferred objections which were rejected and the award was made rule of the court. The C respondent filed an appeal before the High Court. Meanwhile the respondent terminated the contract on 4.4.1988. By the time the appellant had completed the work relating to the sun-struc- ture. D The High Court allowed the appeal and set aside the order of the trial court holding that the Arbitrator had travelled beyond the scope of the agreement between the parties, the contract \Vas to be carried out on a lump-sum basis and that the Arbitrator completely ignored the terms in the agreement that the lump-sum tender would be inclusive of all expenses E for proper and entire completion of work. Hence the appeal, by special leave. The Court by its order date 13.8.191, appointed another arbitrator indicating that the new arbitrator should take not of the fact that the n1atter had once been arbitrated upon and some conclusions \\'ere reached F which were not seriously disputed by either side and proceed to complete the, unfinished part of the a\\-·ard by hearing the parties to the extent, he in his discretion considered necessary. The respondent submitted counter l:laims before the arbitrator "'ho G rejected the same on the ground that as per the directions of this Court he had only to quantify the amount which were left unspecified by the earlier arbitr.a':or. Ultimately, the arbitrator pronounced an a\Vard in favour of the appellant for Rs. 2,82,26,401 pins cost of Rs.1,42,500. The amount included H interest upto March 1992 and also escalation on the awarded amount. The ·1 CHAHAL
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